Z94.7 ENGINEERING ECONOMY

BAYESIAN STATISTICS. (1) classical - The use of probabilistic prior information and evidence about a process to predict probabilities of future events. (2) subjective - The use of subjective forecasts to predict probabilities of future events.

BENEFIT-COST (COST-BENEFIT) ANALYSIS. An analysis technique in which the consequences on an investment evaluated in monetary terms are divided into separate categories of costs and benefits. Each category is then converted into an annual equivalent or present worth for analysis purposes.

BENEFIT-COST RATIO. A measure of project worth in which the equivalent benefits are divided by the equivalent costs.

BENEFIT-COST RATIO METHOD. (See BENEFIT-COST ANALYSIS.)

BOOK VALUE. The original cost of an asset or group of assets less the accumulated book depreciation.

BREAK-EVEN CHART. (1) A graphic representation of the relation between total income and total costs (sum of fixed and variable costs) for various levels of production and sales indicating areas of profit and loss. (2) Graphic representation of a figure of merit as a function of a specified relevant parameter.

BREAK-EVEN POINT. (1) The rates of operations, output, or sales at which income will just cover costs. Discounting may or may not be used in making these calculations. (2) The value of a parameter such that two courses of action result in an equal value for the figure of merit.